Correlation Between Cass Information and Relx PLC
Can any of the company-specific risk be diversified away by investing in both Cass Information and Relx PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cass Information and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cass Information Systems and Relx PLC ADR, you can compare the effects of market volatilities on Cass Information and Relx PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cass Information with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Relx PLC.
Diversification Opportunities for Cass Information and Relx PLC
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cass and Relx is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and Cass Information is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cass Information Systems are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of Cass Information i.e., Cass Information and Relx PLC go up and down completely randomly.
Pair Corralation between Cass Information and Relx PLC
Given the investment horizon of 90 days Cass Information Systems is expected to generate 1.54 times more return on investment than Relx PLC. However, Cass Information is 1.54 times more volatile than Relx PLC ADR. It trades about 0.11 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.02 per unit of risk. If you would invest 4,266 in Cass Information Systems on August 31, 2024 and sell it today you would earn a total of 194.00 from holding Cass Information Systems or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cass Information Systems vs. Relx PLC ADR
Performance |
| Timeline |
| Cass Information Systems |
| Relx PLC ADR |
Cass Information and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cass Information and Relx PLC
The main advantage of trading using opposite Cass Information and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information position performs unexpectedly, Relx PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Relx PLC will offset losses from the drop in Relx PLC's long position.| Cass Information vs. Network 1 Technologies | Cass Information vs. Wilhelmina | Cass Information vs. Mader Group Limited | Cass Information vs. First Advantage Corp |
| Relx PLC vs. Maximus | Relx PLC vs. CBIZ Inc | Relx PLC vs. First Advantage Corp | Relx PLC vs. Network 1 Technologies |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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